The new law is only two pages long and avoids any discussion of details on how to develop half a century of infrastructure deals, nor does it set out the next steps in the complex process.
The lack of a specific plan surprised and disappointed Orange and Oceola state legislators, who suddenly realized that their taxpayers could be on the hook for financing basic services and paying off Disney’s nearly $ 1 billion debt.
“They’re trying to ruin the whole city government in five days,” said Eleanor Wilking, an assistant professor of law at Cornell Cornell Law School. – The details are not trivial.
CNN spoke with a handful of experts and lawmakers to try to figure out what’s next for Florida, Disney and Reedy Creek. Their answers were cautious and speculative, because they believe the law itself offers little clue. Disney has also been visibly silent over the past week.
Overall, however, they suggest three potential paths ahead: One, momentum rules the day and local counties are stuck with a large tax bill; second, the Disney dossier wants to stop the breakup; or three, Disney and Florida are renegotiating a new special area.
“It really depends on what Disney does and what the legislature does,” said Aubrey Juitt, an associate professor at the University of Central Florida and co-author of Florida Politics. “If neither of them does much, then the local authorities need to fix this mess.”
Option 1: Orange and Osceola counties will take the bill
If nothing else changes and Reedy Creek is disbanded in June 2023, then Orange and Osceola counties could be on the hook for a significant cost increase.
Reedy Creek is important to Disney because it gives them more control over their parks, said Richard Foglesong, author of Married to the Mouse: The World of Walt Disney and Orlando. Reedy Creek, whose budget comes almost entirely from Disney, pays for its own fire department, water systems, roads and building inspectors, and can issue bonds and take on debt to pay for long-term infrastructure programs.
But if Reedy Creek is disbanded, those costs and debt payments will be borne by neighboring Orange and Osceola counties. An analysis of the Senate bill notes that the new law will have “indeterminate fiscal impact” on counties.
Orange County officials said they would probably have to raise property taxes on their residents. Orange County tax collector Scott Randolph told CNN on Saturday that residents could receive a $ 163 million annual tax bill when the area is disbanded.
“All this debt and debt goes to Orange County as soon as Reedy Creek is disbanded,” he said. He said paying this could mean a 20% to 25% increase in property taxes for homeowners. (Florida has no personal income tax.)
U.S. Sen. Linda Stewart, a Democrat who is part of Orange County, told CNN on Monday that there was conflicting information about what this would mean for county taxpayers. Orange County is working to publish a more realistic breakdown of the potential impact over the next few days, she said.
However, she is already hearing from frustrated voters worried that their property taxes will rise.
“We have inflation, we have (high) gas prices, and now we’re going to add a huge tax bill? No, that’s not acceptable,” she said.
Option 2: Disney sues Florida
A second potential way forward is for Disney to file a lawsuit to block the law from coming into force.
One argument may be that the dissolution does not follow state law. According to the Florida Statute of 189,072, the dissolution of a special area requires the approval of a majority of landowners. Reedy Creek’s land is mostly owned by Disney.
The bill passed last week takes this into account, saying that “Despite 189,072”, any special area created before 1968 will be disbanded next year. Does the inclusion of the word “nevertheless” mean that the previous law does not apply?
In a discussion of the bill last week, Republican Randy Fine said the “nonetheless” line was legal.
“These are not constitutional requirements. These are legal requirements. And this bill actually changes the law, which we are allowed to do at any time, and says we are not obliged to do these things,” he said.
In which state did Democrat Dottie Joseph respond: “I think that if you change the existing law, you will repeal it, not just put another one that contradicts it, but what do I know? I’m just a lawyer. “
Another potential lawsuit may be based on freedom of speech. Although the new law does not specifically mention Disney or Reedy Creek, Florida Republicans have publicly stated that the law is a response to the company’s criticism of the Parental Rights in Education bill, which critics have called the Don’t Say Gay bill. This state law, signed last month, prohibits schools from teaching children about sexual orientation or gender identity “in a way that is not appropriate for age or development.” After a noise from employees, Disney said the company’s goal was to repeal or repeal the law in court, winning the hostility of right-wing lawmakers.
“They’re a California company visiting Florida,” Fine told CNN last week. “And they’re a guest who has had special privileges that no other company has. If you want special privileges, you’d better behave.”
Disney can sue and argue that the law is an unconstitutional punishment for corporate political speech.
“It all comes down to Disney’s vicious approach, which (Republicans) didn’t like what Disney had the freedom to say,” Stewart said. “People have freedom of speech, so do corporations. They are not excluded from freedom of speech. “
Finally, Disney may not even be the only one to sue the state. Tax attorney Jacob Schumer claims Florida has promised Reedy Creek bondholders that the state will not interfere with county bonds. Dissolving Reedy Creek would violate that agreement, he said.
“Florida simply cannot promise prospective bondholders that it will not interfere with Reedy Creek and then dissolve Reedy Creek,” he wrote on BloombergTax.com.
Reedy Creek himself highlighted the issue in a statement to bondholders last week before the bill was signed. Citing this aspect of the law, the county said it expects to continue its work as usual.
“In light of the Florida state’s promise to county bondholders, Reedy Creek expects to explore its capabilities as it continues its current operations, including collecting and collecting its ad valorem taxes and collecting utility bills, paying its debt. ad valorem tax bonds and utility bonds, abiding by its bond agreements and operating and maintaining its properties, “said Reedy Creek.
Fitch Ratings, the credit rating agency, has put Reedy Creek on Negative Watch, which means there is potential for their debt rating to be downgraded. Analyst Michael Rinaldi told CNN that the uncertainty of the law was to blame, as the two-page bill did not expose the process of what happens to a debt of nearly $ 1 billion when the region is disbanded.
“We are in no man’s land in terms of where things are going,” he said.
Option 3: Disney and Florida renegotiate a new special area
The last time – and most lawmakers and experts have mentioned – is that Disney and Florida are renegotiating the terms of a new special area with more limited powers on the day Reedy Creek falls apart.
A law passed last week explicitly allows just such an agreement. “An independent special area affected by this subdivision may be restored on or after 1 June 2023,” the law states.
DeSantis said this on Monday, saying the dissolution bill passed last week was “the first step in what will be a process to ensure that Disney does not have to run its own government.”
He insisted that Disney would still pay its taxes and debts.
“Believe me, under no circumstances will Disney pay its fair share of taxes,” he said.
“Under no circumstances will Disney be able to pay its debts. We will take care of that,” he added.
Stewart said they could renegotiate small things, such as ensuring that Disney would not start fracking or build a nuclear power plant in the special area. This will allow Disney to retain most of its powers, while allowing DeSantis to maintain its confidence in the right wing.
“I don’t think anyone will go all the way to dissolving Reedy Creek,” she said. “There may be a few things we can do (to negotiate). Whether that will be enough for the governor to keep a face, I don’t know. I can’t read his mind. No one can.”
Wilking, a tax policy expert, said any negotiations on the special region missed wider issues: cultural wars came for big business.
“The bigger problem is really the idea that DeSantis and the Florida legislature are really ready to face these really big and important businesses at the local level to pursue their preferred cultural agenda,” she said. “That’s the real story, I think. Taxes are less important than losing control of Disney.”
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